Indicted Megaupload founder Kim Dotcom began a new file-sharing website Sunday, promising users amped-up privacy levels in a defiant move against U.S. prosecutors who accuse him of aiding major online piracy.

The colorful entrepreneur introduced the Mega site ahead of a lavish gala planned at his New Zealand mansion Sunday night, the anniversary of his arrest on racketeering charges related to his now-shuttered Megaupload file-sharing site. Megaupload, which Dotcom started in 2005, was one of the most popular sites on the Web until U.S. prosecutors shut it down, accusing Dotcom and company officials of facilitating millions of illegal downloads.

"As of this minute one year ago #Megaupload was destroyed by the US Government. Welcome to Mega.co.nz," Dotcom posted on his Twitter account as the new site went live.

U.S. authorities are trying to extradite the German-born Internet tycoon from New Zealand, where he is free on bail. Prosecutors say Dotcom made tens of millions of dollars while filmmakers and songwriters lost about $500 million in copyright revenue.

Dotcom argues that he can't be held responsible for copyright infringement committed by others, and insists Megaupload complied with copyrights by removing links to pirated material when asked.

Mega, like Megaupload, allows users to store and share large files. It offers 50 gigabytes of free storage, much more than similar sites such as Dropbox and Google Drive, and features a drag-and-drop upload tool.

The key difference is an encryption and decryption feature for data transfers that Dotcom says will protect him from the legal drama that has entangled Megaup-load and threatened to put him behind bars.

The decryption keys for uploaded files are held by the users, not Mega, which means the company can't see what's in the files being shared. Dotcom could then argue that Mega - which bills itself as "the privacy company" - can't be held liable for content it cannot see.

U.S. prosecutors declined to comment on the new site, referring only to a court document that cites several promises Dotcom made while seeking bail that he would not - and could not - start a Megaup-load-style business until the criminal case was resolved.